The Efficiency Imperative
When manufacturers are asked about their priorities, efficiency consistently tops the list. According to industry surveys, approximately 44% of manufacturing SMEs cite efficiency improvement as their primary focus—ahead of growth, product development, or market expansion.
This makes sense. In an environment of skills shortages, material cost volatility, and competitive pressure, doing more with less isn't optional—it's survival.
Where Supply Chain Automation Delivers
Supply chain management is rich with automation opportunities. The best performers focus on three areas:
1. Inventory Management
Holding inventory costs money. Not holding enough loses sales and disrupts production. Getting this balance right through manual processes is nearly impossible.
Common Problems:
- Too much stock of slow-moving items
- Stockouts of critical materials
- Poor visibility of what's actually on hand
- Counting errors and "phantom inventory"
- Cash tied up in excessive stock
Automation Solutions:
| Function | Manual Approach | Automated Approach |
|---|---|---|
| Stock counting | Periodic physical counts | Real-time tracking with barcode/RFID |
| Reordering | Someone remembers to check | Automatic alerts at reorder points |
| Forecasting | Gut feel and experience | Data-driven demand prediction |
| Location tracking | "It's somewhere in the warehouse" | System knows exact location |
Practical Starting Point: Implement barcode scanning for goods in and out. Even this basic step improves accuracy dramatically and provides data for better decisions.
2. Supplier Communication
Managing supplier relationships manually creates problems:
- Purchase orders sent by email and forgotten
- Order acknowledgments lost in inboxes
- Delivery date changes not communicated
- Invoice discrepancies discovered late
Automation Solutions:
Automated PO Generation: System creates purchase orders when stock hits reorder point. Sends directly to supplier. Logs in your records automatically.
Status Tracking: Monitor order progress without chasing. Automated reminders to suppliers for confirmations and updates.
Delivery Scheduling: Integration with supplier systems for real-time delivery visibility. Automatic alerts when deliveries are late.
Invoice Matching: Three-way matching (PO, goods receipt, invoice) happens automatically. Exceptions flagged for human review.
Start with your top five suppliers—the ones you order from most frequently. Perfect the process with them before expanding.
3. Demand Forecasting
Forecasting feels like magic, but it's really just applied maths on historical data. SMEs rarely have forecasting capability—they react rather than predict.
What Good Forecasting Enables:
- Buy materials before you urgently need them (better prices)
- Plan production capacity more effectively
- Commit to customer delivery dates confidently
- Reduce expediting costs and emergency freight
Practical Forecasting for SMEs:
You don't need complex AI to forecast better than gut feel:
-
Historical Sales Data: What did you sell in the same period last year? Adjust for known changes.
-
Customer Order Books: What's confirmed for coming months? Weight this highly.
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Pipeline Visibility: What quotes are outstanding? Apply probability factors.
-
Seasonality Patterns: When do demand peaks and troughs occur?
Basic spreadsheet forecasting beats no forecasting. Dedicated tools beat spreadsheets.
Building an Automated Supply Chain: Step by Step
Assessment Phase (Week 1-2)
Map Current State:
- List all suppliers and order patterns
- Document current inventory processes
- Identify pain points and time sinks
- Calculate current inventory accuracy
Quantify Opportunities:
- Stockout frequency and cost
- Excess inventory value
- Time spent on manual processes
- Emergency expediting costs
Foundation Phase (Month 1-2)
Implement Basic Tracking:
- Barcode or RFID for key materials
- Digital goods receiving
- Basic inventory management software
- Supplier contact database
Establish Processes:
- Standard reorder points for A-items
- Purchase order workflow
- Goods receipt procedures
- Exception handling rules
Enhancement Phase (Month 3-4)
Add Intelligence:
- Automatic reorder generation
- Supplier performance tracking
- Basic demand forecasting
- Low stock alerts and dashboards
Integrate Systems:
- Connect inventory to purchasing
- Link receiving to accounts payable
- Feed production into demand signals
Optimisation Phase (Month 5-6)
Refine and Expand:
- Tune reorder parameters based on data
- Expand to more suppliers/materials
- Add advanced forecasting
- Implement vendor-managed inventory where appropriate
Tools That Work for SMEs
Inventory Management
Entry Level:
- Sortly
- inFlow
- Zoho Inventory
Mid-Range:
- DEAR Inventory
- Cin7
- TradeGecko/QuickBooks Commerce
More Comprehensive:
- NetSuite
- SAP Business One
- Microsoft Dynamics
Procurement Automation
Simple Needs:
- Order.co
- Procurify
- Precoro
Integrated with Accounting:
- Sage procurement features
- Xero purchase orders
- QuickBooks purchase orders
Demand Forecasting
Accessible Options:
- Inventory Planner
- Lokad
- Blue Yonder demand planning
Spreadsheet-Based: Honestly, a well-designed Excel model beats no forecasting and costs nothing beyond time.
Software selection matters less than process design. A simple tool used well beats a sophisticated system poorly implemented.
Getting Buy-In for Investment
Supply chain automation often requires capital investment and process change. Here's how to build the case:
Speak in Money
Calculate specific savings:
- Inventory reduction: If you hold £500,000 in stock and can reduce by 20%, that's £100,000 freed up
- Stockout costs: Revenue lost when you can't deliver
- Process costs: Hours spent on manual tasks × hourly rate
- Error costs: Discrepancy resolution, expediting, returns
Show Quick Wins
Propose a pilot that:
- Addresses a visible problem
- Can be implemented quickly
- Has measurable outcomes
- Doesn't require massive change
Success with a pilot builds support for broader investment.
Address Concerns
Common objections and responses:
"Our business is too unpredictable for automation" Actually, variability is exactly why you need better systems. Manual processes can't respond fast enough.
"We've always done it this way" And how's that working? Are stockouts rare? Is inventory lean? Is procurement efficient?
"We don't have time to implement this" You don't have time not to. Every day with inefficient processes is a day paying the hidden tax.
Warning Signs You Need Help
Consider prioritising supply chain automation if you:
- Regularly run out of materials mid-production
- Hold more than 60 days of inventory on average
- Spend significant time chasing orders and deliveries
- Don't know your true inventory accuracy
- Rely on specific individuals' memory for ordering
- Pay frequent expediting or emergency freight charges
- Have invoice discrepancies as a regular occurrence
Any of these suggests there's real value waiting to be captured.
Ready to improve your supply chain efficiency? We help manufacturing SMEs implement practical automation that reduces costs and improves reliability.
Book a consultation to discuss your specific supply chain challenges.
